Advisory

INSURANCE FOR COMMERCIAL SPACE

Insurance for commercial space covers protection against fire, burglary, terrorism or natural disaster and is largely used by business houses. This can be a major expense for businesses and therefore should be done judiciously. Read on to understand more on this subject.

Words: Sangita Sinha

THE market is flooded with many insurance companies offering commercial insurance with the scope extending not just to the office building but also to furniture and equipment. You can even insure against any loss of income due to business interruption.

Industries also need to protect themselves by obtaining insurance covers to protect their buildings, machineries and stocks. They need to cover their liabilities as well. Financiers insist on insurance. Most industries or businesses that are financed by banks and other institutions do obtain covers.

But are they obtaining the right covers? And are they insuring adequately? Also organisations that are self-financed should ensure that they are protected by insurance.

ASSET PROTECTION
Property insurance protects when your property gets damaged. For additional coverage you will need to buy separate policies.

Fire insurance-
This is the most popular property insurance. It covers you against loss due to fire. Make sure you include office premises, elevators, furniture, and equipment. Check for policies that cover earthquakes, riots and terrorism. Many insurers also offer plans where the loss of profit due to fire is also covered as an extension.

Burglary – Covers against theft and burglary; includes both loss as well as damage caused during burglary. Some items are excluded like jewellery and business books.

Machinery insurance – Covers you against accidental breakdown of equipment or machinery.

Debris removal insurance - ICovers the cost of removing debris after a fire, flood and windstorm.

Inland marine insurance – Covers other people’s property on your premises.

Money insurance - This special insurance covers currency, bank drafts and pay orders, both kept in a safe or if lost in robbery during transit.

Data protection - Covers the cost of recovering data stored in computers.

All-risk insurance - Offered selectively, it provides cover for jewellery and/or portable equipment. It is important to note that an all-risks policy is not free from exclusions. The term doesn’t mean that anything and everything is covered.

Marine cargo insurance -This covers transits by water, air, road, rail, registered post parcel, courier, or a combination of two or more of these. Buyers, sellers, import/export merchants, buying agents, contractors and banks can take this policy.

Marine cargo insurance – This covers transits by water, air, road, rail, registered post parcel, courier, or a combination of two or more of these. Buyers, sellers, import/export merchants, buying agents, contractors and banks can take this policy.

LIABILITY INSURANCE

Liability insurance protects you if any damage is caused to the third party by you, your employees or your products and services. The damage could be personal injury or property damage.

Liability insurance includes separate limits and options for personal injury and property damage. Even though you have strategies to avoid liability risks, it is still wise to be prepared by taking liability insurance based on your requirement.

MAKE A WISE CHOICE

• Understand the different types of policies and the purpose they will serve
• Compare premiums and policies beforehand
• Make a cost-effective insurance choice
• Check if the company selling the policy is registered with IRDA
• Make sure you buy the policy through a genuine licensed agent or broker. Ask for an identity card or licence
• You can also buy policies from the company directly
• Read the policy brochure/prospectus carefully and get to know what the policy does and does not cover.

expert-sanjay-verma-255x204Expert views

An interview with Alok Saxena, a chartered accountant and a surveyor for PSU insurance companies based in Lucknow. He also specialises in insurance survey and loss assessment.

Why one should buy commercial insurance?

Insurance is a contract whereby the insured is indemnified by the insurer/insurance company for the risk of losses and damages caused by any unforeseen circumstances. The purpose of any kind of insurance is not for savings or investment returns. It is meant for protecting a property.

How to buy property insurance and from whom?

There are many options available in the insurance market. However, one must take certain basic precautions at the time of purchase of insurance policies. First among them is to purchase the same from Insurance Regulatory Development Authority (IRDA) approved insurance companies.

Further, it is preferable to have the office/branch office of the insurance company in the proximity, for the early reporting of the damages. The same is a very important factor in order to claim insurance coverage as the law mandates for the early assessment and inspection of the quantum of damages by the insurance surveyors.

What are the appropriate legal remedies available in case of any grievance or deficiency of service on part of the insurance company?

It is always advisable to write to the insurance company and give them sufficient time to respond suitably. If they don’t respond, or if you are not satisfied by the response, then you can approach for the appropriate legal remedies.

For complaints relating to personal insurance covers up to a value of Rs2 million you may approach the insurance ombudsman in your area. It should be one of the preferred forums for the adjudication of grievances as the ombudsman has a technical team that will go into the merits of each and every case. The ombudsman is required to pass an award within a period of three months from the receipt of the complaint. The award is binding upon the insurance companies.

In case the policy holder is not satisfied with the award of the ombudsman then he can approach other legal forums in accordance with law for the redressal of his grievances. An aggrieved policy holder can also lodge a complaint before the IRDA against the insurance company.

Can I take two policies and get claims under both of them?

In case of an indemnity cover (one that seeks to compensate the actual loss), for instance, a policy that covers property, if there are two policies in vogue, the loss shall be shared by both the policies. In no case can an insured get more than the actual pecuniary loss he or she has incurred. On the other hand, in respect of benefit policies like Personal Accident policy, where a fixed compensation is paid, no matter what the actual loss is, one may obtain more than one policy.